Former worker's web site leads to a lawsuit

First case of its kind

Susan Heinrich, Financial Post
8th December 1998

Canada's largest mutual fund company is suing a former employee for $450,000, claiming he is slandering the firm on his home-grown Internet site.

Winnipeg-based Investors Group Inc. is suing Douglas Hudson, a Montreal-based fund salesman. It says his Web site attacks the company's reputation.

Tomorrow, a Montreal court will decide whether Mr. Hudson should immediately have to amend the Web site, or it will schedule a hearing at a later date.

If it proceeded to trial, the case would be a first because the issue of Internet slander is uncharted territory in Canada, said Michaelt Geist, a law professor at the University of Ottawa.

"In Canada there haven't been any [slander] cases in connection with the Internet. You have seen several cases in the U.S. where people took action against the Internet service provider," he said.

Although the theory has not been tested, Mr. Geist believes existing rules that apply to slander would apply to a situation of slander on a Web site.

Mr. Hudson said his intention is not to attack the reputation of Investors Group, but to tell his story. "I think the Web site is in the public interest," he said. He believes he was treated unfairly by Investors Group and wants to "warn others by telling them my story."

Terry Wright, general counsel at Investors Group, said, "We are not asking that the Web site be removed entirely, but that it be amended to not be defamatory to our company and that it be truthful. We are not trying to limit his freedom of speech."

The lawsuit is the latest chapter in a story about an unhappy former employee who believes he was treated unfairly and has spent about $35,000 on legal bills trying to prove it.

Mr. Hudson said he was fired in July, 1997, because of a personality conflict with his branch manager and a fellow employee. He also believes he should be able to pursue the business of clients whom he used to represent at Investors Group.

He worked for the company in a Montreal branch for about 3-1/2 years as a mutual fund salesman administering about $4-million in client assets. He is now selling mutual funds for another company in Montreal.

A contract he signed with Investors Group after he joined prevented him from within two years of his leaving the firm.

"I spent three years bringing in everyone I knew as a client, my family and my friends." But if you are fired "you can't speak to these people again for two years," he said.

Mr. Hudson said he was not told of the contract until some time after he had joined the firm and had already made his first sale. "I was told if I didn't sign it I wasn't going to get paid," he said. "I had bills to pay so I did."

But a judgment by a Quebec court on the wrongful dismissal suit in April upheld the agreement that kept him from pursuing the business of former clients. It also found that Mr. Hudson was terminated because he did not comply with the company rules.

Mr. Hudson is appealing the decision.

It was after the court judgment that Mr. Hudson decided to put up a Web site, in order to warn others on the contracts that advisers sign, he said. "I decided I was not going to remain silent for another four years waiting for the appeal to be heard."

Investors Group manages about $33.66-billion in mutual funds.

Back to Media Page

Press Index